The Founder's Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup
Often downplayed in the excitement of starting up a new business venture is one of the most important decisions entrepreneurs will face: should they go it alone, or bring in cofounders, hires, and investors to help build the business? More than just financial rewards are at stake. Friendships and relationships can suffer. Bad decisions at the inception of a promising venture lay the foundations for its eventual ruin. The Founder's Dilemmas is the first book to examine the early decisions by entrepreneurs that can make or break a startup and its team. Drawing on a decade of research, Noam Wasserman reveals the common pitfalls founders face and how to avoid them. He looks at whether it is a good idea to cofound with friends or relatives, how and when to split the equity within the founding team, and how to recognize when a successful founder-CEO should exit or be fired. Wasserman explains how to anticipate, avoid, or recover from disastrous mistakes that can splinter a founding team, strip founders of control, and leave founders without a financial payoff for their hard work and innovative ideas. He highlights the need at each step to strike a careful balance between controlling the startup and attracting the best resources to grow it, and demonstrates why the easy short-term choice is often the most perilous in the long term. The Founder's Dilemmas draws on the inside stories of founders like Evan Williams of Twitter and Tim Westergren of Pandora, while mining quantitative data on almost ten thousand founders. People problems are the leading cause of failure in startups. This book offers solutions.
From the Back Cover This book provides the rare combination of practical advice and scholarly research. It gets to the heart of the people issues that can bedevil every, and I do mean every, startup. Issues such as founder motivations, equity splits, and equity control can make or break a company. I guarantee that the price of this book is approximately one-thousandth of what you'll pay lawyers to clean up your mess if you don't read it. --Guy Kawasaki, author of Enchantment and former chief evangelist of Apple The Founder's Dilemmas is required reading for entrepreneurs, venture capitalists, and the professionals who work with them. Few entrepreneurs appreciate the far-reaching implications of decisions they need to make at the beginning of a startup venture. Most founders make these critical decisions based on their gut instincts; backed up by data covering ten thousand founders, Noam Wasserman shows that the most common choices made at the outset of a new venture are often the wrong ones. This book also shines a light on the difficult conversations that entrepreneurs need to have with their colleagues and with their investors, and makes plainspoken, commonsense recommendations that facilitate this dialogue. --Pascal Levensohn, founding partner of Levensohn Venture Partners and member of the board of directors of the National Venture Capital Association (2007--2011) The Founder's Dilemmas will change the way we think about the internal dynamics that can make or break startup companies. Drawing on substantial research and considerable insight into practice, Wasserman uncovers the inner lives of startups, exploring the personal and professional conflicts that founders encounter on their entrepreneurial journeys. His book will appeal to academics and practitioners alike. --Thomas Hellmann, University of British Columbia The research that Noam Wasserman has assembled here can help entrepreneurial companies who want to prepare well for their future. The Founder's Dilemmas is a must-read for anyone thinking about starting a business. --Timothy C. Draper, founder of Draper Fisher Jurvetson Looking at the real-life founder issues of many accomplished entrepreneurs, Noam Wasserman draws insights that are both universal and timeless. If you're thinking of starting a new venture, do your homework and read this first. --Jeremy Stoppelman, CEO and cofounder of Yelp Noam Wasserman takes you through every major issue in a startup and shows you how to handle it in a prescriptive, logical way. The Founder's Dilemmas is for everyone thinking about starting a serious company, with their eye on a big prize, and for the people who invest in those companies. --Paul Maeder, chairman of the National Venture Capital Association, founder and general partner of Highland Capital Partners If you're starting a new company, you probably already know that a crazy variety of land mines await you. What if you had a map that showed exactly where they are and how to avoid them? Wasserman's recommendations are backed up by rigorous research--a rare thing in books about entrepreneurship--and his stories and anecdotes serve as accessible illustrations of situations faced by thousands of companies. Having seen these dilemmas derail countless startups, I wish every entrepreneur and prospective founder would read this book. --Eric Ries, author of The Lean Startup Every entrepreneur faces trade-offs when founding and growing their company. As we discovered at YouTube, those early decisions have far-reaching impacts and lead to unforeseen pitfalls down the road. Noam Wasserman uses vivid anecdotes and deep research to expertly outline the key early choices that define a startup, making The Founder's Dilemmas an invaluable alternative to real-world trial and error. --Chad Hurley, founder-CEO of YouTube [A] wonderful book. . . . It's a must read before you have even one more discussion with anyone about starting a company with them. --Melinda Thomas, Entrepreneur-in-Residence for the City of New York The Founder's Dilemmas fills an important gap in the entrepreneurship literature by providing an in-depth treatment of the people problems that confront all new business founders. Wasserman argues that people problems are responsible for a significant portion of startup failures, and that entrepreneurs tend to underestimate their potentially dangerous long-term effects. In this pathbreaking book, he grounds the analysis of these problems in both richly textured case examples and rigorously developed concepts and theories. --Ari Ginsberg, director of the Berkley Center for Entrepreneurial Studies at New York University's Stern School of Business This book offers a rich understanding of the central personal dilemmas that entrepreneurs uniquely face. These dilemmas are tied to particular choices for entrepreneurs that can have subtle and unexpected ramifications. I don't know of any other book that comes close to examining these specific and important issues. --Kathleen M. Eisenhardt, Stanford University, coauthor of Competing on the Edge: Strategy as Structured Chaos